updated 5/10/2006 5:49:15 AM ET 2006-05-10T09:49:15

President Vladimir Putin called Wednesday for Russia to focus on investment and innovation to win its deserved place in the world economy, as well as to implement new welfare measures to stem the nation’s disastrous demographic decline.

In his seventh state of the nation address, Putin said there was a “consensus in society” that Russia’s falling population must be addressed and indicated the government will take measures to encourage young couples to have more children.

Noting there is an annual decline of nearly 700,000 people a year in Russia, Putin said that child-care benefits should be increased and women who have a second child should be supported because they often are out of the work force for a long time.

“We must at least stimulate the birth of a second child,” Putin said, adding that concerns about housing, health care and education are prompting many families to stop at one.

He called on the government to work more effectively to raise Russians’ standards of living, and made his customary dig at official corruption, saying that a number of state officials “have enriched themselves at the cost of the majority of citizens.”

'10 years out of date'
Putin also acknowledged that his originally stated goal of doubling gross domestic product within a decade now looks unlikely, due to growth falling slightly short of the required rate in the last couple of years.

However, he stressed that overall economic developments have been positive, and took credit in particular for the explosive growth in the market capitalization of gas monopoly OAO Gazprom over the last year.

“This didn’t happen by itself ... but as the result of certain actions by the Russian government,” Putin said.

He identified obsolete capital equipment and poor energy efficiency as two of the factors affecting the Russian economy’s competitiveness. He said much of the capital equipment produced in Russia is “10 years out of date” and added that “even taking into account the climatic conditions of our country, energy efficiency is much lower than in competing nations.”

In a barb aimed at the United States, he said countries should not use Russia’s World Trade Organization accession negotiations as a vehicle to make unrelated demands.

“The negotiations for letting Russia into the WTO should not become a bargaining chip for questions that have nothing in common with the activities of this organization,” Putin said.

Russia has signed agreements with the European Union, China and Japan, among others, but has yet to reach deals with the United States. In March, Putin expressed frustration at the pace of negotiations, accusing the United States of coming up with ungrounded demands that were hindering talks.

One of the persistent obstacles to Russia’s WTO accession has been its poor record on combating the production and sale of pirated goods. “It is our obligation” to protect copyrights, Putin said.

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